Chapter 7 Personal Bankruptcy
For most people, the chapter 7 “straight bankruptcy” is usually the best solution. Chapter 7 is also usually the best bet for those who have few assets or little income.
Under a Chapter 7 bankruptcy all or most of your debts are wiped out permanently. If you
have some equity in your home, you’ll probably lose it. (Unless you live in one of
the states that have unlimited homestead exemptions)
If you own a home that you want to keep, you might want to consider the chapter 13 form of
bankruptcy instead. (Though your lawyer may not tell you, you can file for a chapter 7
bankruptcy later while you’re in the midst of a chapter 13 plan.)
Car Insurance and Bankruptcy
If you intend to keep
your car, you should be careful to maintain your automobile insurance. Your creditor, be
they a lessor or lien holder can use your failure to maintain insurance as an excuse to
get around the automatic stay and repossess your auto. In many areas the court may allow them to
ignore the stay if there's no insurance protecting the value of the vehicle.
Community Property States List
If you're married and reside in a community property state special rules apply to your marital assets.
The states that are currently community property states include:
Alaska
Arizona
California
Idaho
Louisiana
Nevada
New Mexico
Puerto Rico
Texas
Washington
Wisconsin
In other non-community property states there is a much clearer legal barrier between the
assets and debts of married individuals.
Don't Miss The Creditor Meeting
When your creditor meeting (Section 341 creditor meeting) is scheduled - be VERY sure you show up right on time. If you should miss this meeting for whatever reason - bad things will happen. This is not time for excuses.
In
some areas your entire bankruptcy petition may be discarded. Your lawyer will keep
your fee and you'll be out in the cold.
Unsecured Debts and Bankruptcy
Certain classes of
debts are unsecured by any real property. These debts include credit card, personal loans,
medical bills, bills for services, utility bills, repossession deficiencies (after a
repossession).
Other debts usually cannot be erased by bankruptcy and include student
loans, child support and IRS tax bills.
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